Nikkei Dips; Toyota Recalls Expand

Chandrasekhar Atreya
30 Jul, 2010
New York City

Stocks in Japan fell sharply with as many as 204 stocks retreating in the Nikkei 225 Stock Average on an increase in unemployment and a drop in core consumer price index. Toyota problems mount as recalls continue. Strikes in China affected 32 Japanese firms, a report by Asahi shows.

[R]5:00 PM Tokyo, Japan – Stocks in Japan fell sharply with as many as 204 stocks retreating in the Nikkei 225 Stock Average on an increase in unemployment and a drop in core consumer price index. Toyota problems mount as recalls continue. Strikes in China affected 32 Japanese firms, a report by Asahi shows.[/R]

Stocks in Japan fell after reports showed unemployment rose and core consumer index slipped in June.

The Nikkei 225 Stock Average slipped 1.64% or 158.72 to close at 9,537.30. Of these stocks only 16 gained, while 204 fell and 5 remained unchanged. The broader Topix lost 1.4% to 849.50 with seven stocks losing to each that gained.

For the week the Nikkei gained 1.1% while the Topix gained 1% for the second week of continuous gains.

Japan’s core consumer price index fell 1% year-on-year to 99.3 in June, the Ministry of Internal Affairs said today.

Seasonally adjusted unemployment rate rose 0.1% point from May to 5.3% in June, the fourth straight month of increase, a statistic bureau report showed today in Tokyo. Household spending however rose 0.5% in June from a year before, a separate report showed.

Economy Minister Satoshi Arai told reporters in Tokyo today after these reports that the economy is recovering gradually and deflation is easing little by little. He also added that the central bank and the government are working together to overcome falling prices.

Toyota Motor Corp is recalling nearly half a million cars, most of them large sedans sold in the U.S. , for problems that can cause steering wheel to lock up, in the latest indication that the automaker is still struggling with vehicle problems even as it works to overhaul quality control.

The recall announced on Thursday, affects 412,000 vehicles in the U.S., 373,000 Avalon sedans and 39,000 Lexus LX 470 SUV’s, making it the largest recall since announcing it would fix 600,000 Sienna Minivans over rusting spare tire holders in April.

Mitsubishi Estate Co, a real estate firm in Japan, said its first quarter net income dropped by 30% due to declining home sales.

Net income fell to 6.77 billion yen in the quarter ended June 30, from 9.64 billion yen in the same quarter a year ago. Sales fell 9.8% to 189 billion yen, the company said in its report to the Tokyo Stock Exchange today.

The central bank board members fought for months before ending the zero-interest rate stance that started in August 2000. This was revoked seven months later.

“It is not desirable to prolong the half-dead monetary policy and I hope to normalize it when possible,” the then governor Masaru Hayami said at a June 28 meeting, according to transcripts of meetings form the first half of 2000 released in Tokyo today.

Strikes in various factories in China that lasted nearly two months starting in May affected 43 foreign companies including 32 Japanese firms, according to a research undertaken by Asahi Newspaper.

The government in Japan is considering adopting an auction system to allot spectrum areas for new high-speed services, Nikkei English News reported today.

Gainers & Losers

Shinsei Bank led the gainers with a gain of 8.11% to 80 yen followed by Panasonic Corp 6.04% to 1,142 yen and Fujitsu Ltd 4.41% to 615 yen.

Nippon Express led the losers with a loss of 9.74% to 352 yen followed by Sanyo Electric 8.72% to 136 yen and Kobe Steel 7.18% to 181 yen.